Lee v. Kirby , 104 Mass. 420 ( 1870 )

Ames, J.

The original contract appears to have been free from all ambiguity. There is no suggestion of any omission, mistake or fraud. It is not claimed that it was not fair and just in all its parts, or that it was harsh or unreasonable, or that it was attended at the outset with any circumstances that would be likely to prevent the court, in the exercise of its discretion, from ordering its specific performance on the application of either party. It was in view of certain mutual advantages that the price of the land was agreed upon ; and so far as the original contract is concerned, it does not appear to be necessary or expedient to inquire by what computation, or in what precise mode, the parties arrived at the sum of $3.40 per square foot as the price. They manifestly expected that all the dwelling-houses would be completed in a little over one year from the date of the contract; and they were looking to the sale of the lots and houses as the source from which the defendant would derive his profits and the funds with which he was to repay the plaintiff’s advances. There is nothing in the contract that imports that the defendant was at liberty to build or not as he should elect, or that he was to take the land at one price if he should build, and at a different and lower price if he should not. His promise to build on each of the nine lots, according to the prescribed model, was unconditional, and be reserved no right to recede or stop short if the enterprise seemed likely to prove unprofitable. The provision that, if he should not complete the houses, the plaintiff might do so, and charge the expenses to the defendant, is a cumulative remedy only, and does not confine the plaintiff to that mode of enforcing the contract. Dooley v. Watson, 1 Gray, 414. Hooker v. Pynchon, 8 Gray, 550.

The defendant however insists that the ease does not stand upon the original Contract, but upon a subsequent agreement by which it was waived or greatly modified. It became convenient to him, soon after the date of the contract, and after he had begun to prepare the foundations for six of the houses, to postpone operations upon the remaining three, and the evidence shows that he made a proposition to that effect to the plaintiff The defendant insists that the effect of the written correspondence, which thereupon took place between them, was wholly to abrogate the written contract to that extent, and remit the parties to a previously made oral agreement.

The plaintiff writes to this effect: “ Our agreement was on the basis of one year’s interest upon the cost of the land you purchased of me, and average six months’ interest on the advance (that is, that the interest should not amount to more than six months on the whole advance). If you should desire an extension of a third of the cost of the land, and one third of the whole advance,, I shall be prepared to agree to it on the basis of our contract.” To this the defendant replies: “ Yours is before me, in which you give the basis of our agreement, and say you will be prepared to extend the time on one third of the cost of the land, and one third of the whole cash advance, upon the basis of our contract; all which I agree to.”

There must of course have been some preliminary negotiation, and it is admitted that the price at which the land was to be sold was arrived at in the manner indicated in the defendant’s answer. But we do not find that there was any oral contract or independent agreement previous to the written contract, or that the case differs in any material particular from the common case in which parties, after arranging orally the terms upon which they are willing to agree, finally reduce their contract to writing for the purpose of showing the precise result of their negotiations, and excluding all preliminary offers and propositions. The subject of the correspondence was the extension of the time as to three of the houses, and upon that the plaintiff says, “ If you should desire an extension,” &c., “ I shall be prepared to agree to it.” There is nothing in either of the letters that implies that the houses were not to be built, and the advances not ) be made. On the contrary, the extension was to apply as much to the advances as to the price of the land, which shows that the expectation was that all the houses would be built, though not at so early a period as was at first contemplated. There is no indication that, at that early period after the date of the contract, anything had happened to impair the prospect of a successful speculation, or that the defendant had changed his mind as to going on with it. It appears to us therefore that the correspondence above mentioned does not amount to a waiver of the original contract, but to a notification from the plaintiff that if a partial extension of time should be desired be would be prepared to agree to it upon the “ basis ” (which may mean, upon the general rule or principle) of the existing contract. No specific time or period of extension having been spoken of on either side, nothing can fairly be inferred from the letters except that a postponement as to three of the lots, for a reasonable time, would be assented to by the plaintiff if desired by the other party.

It must be admitted that the parties have expressed themselves in such a manner in those letters, that their meaning is somewhat obscure. The plaintiff does not say how long an extension he would agree to, nor the defendant how long an extension he should desire. Each party speaks of the “ basis of our agreement,” and the “ basis of our contract,” in such a manner as to raise the question whether they intend to make a distinction between “ agreement” and “contract,” meaning by the former expression the preliminary' negotiations by which the price of the land was determined, and by the latter the final contract as reduced to writing. Neither is it entirely clear what they mean by the cost of the land, or whether that word means the “ cash price,” or the price if sold on credit and coupled with an obligation to advance money for building purposes. It is also difficult to say whether, when they speak of the “ basis of our contract,” or agreement, they mean anything more than if they had said “ one part of the agreement,” or “ one important element of the agreement.” But if it was the intention of the parties in those letters to reduce the price of the land to ¡$2.50 per square foot, and to give to the defendant the option to buy three of the lots at that price, without building the three remaining houses, or to take them at the agreed higher price if he should decide to build the houses and so to require the advances, we can only say that they have wholly failed to express any such intention. It is difficult to believe that so great a change in a written agreement, carefully drawn up in due form of law, and recently signed and sealed by the parties, would be made in so loose, careless and uncertain a manner. We can put no such interpretation upon the letters without doing violence to the terms in which the parties express themselves.

The defendant, however, insists in his answer that in June 1866 a new agreement was made between the parties, to the effect that the original contract “ was to be dropped,” so far as related to the building of the remaining houses after the completion of the five; that no further advances should be required of the plaintiff; and that the price of the land should be reduced, as to the four remaining lots, to $2.50 per square foot. But we do not find, in the report of the evidence, any proof of this alleged new agreement. It is true that it appears that the defendant bad found the enterprise, as far as he had gone with it, a losing one; that he reported to the plaintiff his unwillingness to carry it through as he had originally intended, and was told that he must act upon his own judgment. The plaintiff appears to have said that he should be glad to be relieved of the obligation to make any further advances; but we do not find it proved that he assented to a reduction of the price of the remaining lots of land, if the houses were not built. On the contrary, the price was charged at $3.40 per square foot, in the accounts rendered by the plaintiff on the first day of December in each of the years 1866 and 1867, and it does not appear that the defendant expressed any surprise or made any objection, on receiving those accounts.

Another ground of objection on the part of the defendant is, that, as matters now stand, the contract is hard, unequal and oppressive, and that its literal enforcement against him would operate in a manner different from that which was in the contemplation of the parties when it was executed. In an application to a court of equity for a specific performance, a decree for such performance, on proof of the agreement, is not a matter of strict right, but is discretionary with the court, in view of all the circumstances. Western Railroad Co. v. Babcock, 6 Met. 346, 352. 1 Story Eq. § 742, and cases cited. It will not be directed, if it should be, under the circumstances, unreasonable to do so. Wedgwood v. Adams, 6 Beav. 600. This unreasonableness does not admit of being settled by any general definition, but must depend upon the circumstances of the case. King v. Hamilton, 4 Pet. 310. We do not understand the defendant in the case before us to charge that there has been either fraud, surprise or mistake. As to the alleged hardships of the case, the general rule is, that inadequacy of consideration, exorbitance of price or improvidence in the contract, in the absence of fraud, ambiguity or mistake, will not constitute a defence. “ A court of equity does not affect to weigh the actual value nor to insist upon the equivalent, in contracts, when each party has equal competence.” Hart, Chancellor, in Sullivan v. Jacob, 1 Molloy, 472, 477. To invalidate a contract on the ground of hardship, the inadequacy of consideration or exorbitance of price must be so gross as to shock the conscience, and the proof of it so great as to lead to a reasonable conclusion of fraud or mistake. Coles v. Trecothick, 9 Ves. 234. Osgood v. Franklin, 2 Johns. Ch. 1, 24. In the language of Chief Justice Shaw, 6 Met. 358, we must say that “ we can perceive no such proof, nor anything approaching to it.” The question of the want of equality and fairness, and of the hardship of the contract, should, as a general rule, be judged of in relation to the time of the contract, and riot by subsequent events. We do not intend to say that the court will never pay any attention to hardships produced by a change of circumstances, but certainly the general rule is that a mere decline in value since the date of the contract is not to be regarded by the court in cases of this nature. Low v. Tread well, 3 Fairf. 441. Coles v. Trecothick, 9 Ves. 234. Revell v. Hussey, 2 Ball & Beat. 287.

But the hardship upon which the defendant mainly relies depends in a great degree upon the manner in which the agreed price of $3.40 per square foot was made up. He contends that somewhat more than one fourth part of that price was intended expressly as a compensation to the plaintiff for the inconvenience and trouble of raising and advancing a large sum of money on each lot; that in fact it was a commission upon a loan, and was incorporated into the price to disguise a charge which otherwise would have been usurious; that, as events have taken such a course that no advance is now required, there is a failure of consideration as to that portion of the agreed price. He insists that he was really to pay a large bonus for a loan of money; and as he does not borrow the money, and gave seasonable notice that he should not borrow it, that it would be inequitable to compel him to pay the bonus, under whatever disguise it may be presented; and that a literal fulfilment of the contract would compel him to pay the plaintiff for sacrifices which he has never made, and inconveniences which he has never incurred. But it does not appear that the plaintiff has ever consented to any modification of the contract in this respect, or asked to be relieved of any part of the obligations which he thereby assumed. For the sake of selling his land at the contract price, he was willing to enter into the stipulations as to the proposed loan. For the sake of securing the proposed loan, the defendant was willing to buy at that price. The only question for the defendant was whether he would undertake to buy at that price, and on those terms. Upon that point he made his election. Can he now force the plaintiff to consent to abandon the contract, or reduce the price to $2.50 per square foot, by offering to renounce what the plaintiff conceded for the sake of obtaining the price stipulated in the contract, which concession he still offers and claims to carry out? We do not see why the plaintiff has not, at this moment, a perfect right under the contract to proceed to build the four remaining houses himself, at the expense of the defendant, and to sell them on his account, charging him with the loss if they should sell for less than cost, including the agreed price of the land as a part of that cost.

The defendant’s answer does not specifically charge usury as a ground of defence, but we have no doubt that usury may very properly be taken into consideration by the court, under an answer that insists upon the objection® that the contract is hard, unconscionable and oppressive. It will hardly be contended, however, that there was not an actual sale of the land contemplated by the parties. It was not a mere cover for usury, like the case in which a loan is made wholly or in part, in goods at exorbitant prices. The price at which the defendant undertook to buy was a distinct and definite sum of money. Beete v. Bidgood, 7 B. & C. 453. There was no misrepresentation or fraud, no abuse of advantages, and no inequality of position of which he can complain. It can hardly be said upon the evidence that the price was exorbitant, and as it was at the time satisfactory to the defendant, it can hardly be material how it was made up. If there was an independent or collateral agreement to the effect that the defendant might buy for cash at a lower price, and if that collateral agreement was intentionally omitted from the written contract, and left as a matter of honorary obligation merely, it would not present a case of mistake, fraud or surprise upon which the court would refuse a decree of specific performance. Irnham v. Child, 1 Bro. Ch. 92, was a case in which a right to redeem was omitted from a written contract to convey, and left to an honorary understanding, in order to avoid the objection of usury. Lord Thurlow held that it was no bar to a decree for the specific performance of the written contract. 1 Sugden on Vendors, (7th Am. ed.) 181. 1 Story Eq. § 750, and cases cited.

In view of all the facts, we cannot say that the contract presents any features of ambiguity, surprise, mistake, omission, usury or hardship that should deprive the plaintiff of his equitable remedy. It is his duty to fulfil all its stipulations on his own part; and his right on those terms to insist that the defendant shall do all that he undertook to do on his part.

Decree for the plaintiff, with costs.